You are here

Samsung's Galaxy S4: Should Apple Be Afraid?

I have to tip my cap to Samsung. This is despite my loyalty to Apple(AAPL). With the arrival of Samsung's new phone, the Galaxy S4, I'm realizing there isn't much that separates the two companies.

That is to say, I can't hold Apple in such high regard, without doing the same for Samsung. And to continue to argue that that one is better than the other is to miss the main point of what is going on today's ever-competitive battle for fingertips.

Aside from some incremental updates, the Galaxy S4 doesn't appear to be significantly different from the Galaxy S3. While the S4 looks very similar to the S3 since they both have the same body style and casing, the S4 also sports a slightly larger screen, which is roughly 4% larger diagonally. But other than a better processor and camera, does Apple really have anything to be fearful about?

Gene Munster, analyst at Piper Jaffray added the following:

"We believe some of the software features are unique, including the tilt to scroll, video pausing based on facial recognition, and hand gesture based interactions, but view these software improvements as minor compared with what Siri was to the iPhone 4S or even Google Now to Android... Despite the launch and fanfare around the Galaxy S4, we continue to believe that Apple will maintain a low 40% market share in the high-end smartphone market in CY13."

However, Munster wasn't alone in his sentiment. Peter Misek, who recently lowered his iPhone estimates for Apple, while reducing his price target to $420, seems broadly unimpressed by the Galaxy S4. He said:

"The hardware was as expected and much like iPhone 5, the S4 saw little change in design from its predecessor besides a slight increase in size from 4.8" to 5". Samsung focused primarily on its software innovation and interface inputs such as gesture control and Smart Scroll/Pause. While we were impressed overall with our hands-on experience, we await to see how these features perform in the real world and if they are actually used."

As for what all of this mean for Apple, Misek added:

"We believe the S4 will certainly sell well and it is incrementally negative for Apple; however, the device is not revolutionary, in our view. Aside from the large screen size, which we believe gives Samsung a large advantage over Apple, we believe many of the features can easily be replicated. Additionally, a major complaint amongst Galaxy users is that they do not like Samsung's customized software, especially when it is a downgrade in performance from stock Android features."

Even though I’m an unabashed cheerleader of Apple, when assessing Samsung’s ascent to the top of the Smartphone market, I have no choice but to give the South Korean giant its due credit. Though a lot has been made about Samsung’s recent dominance, many do not fully understand how this has happened. Likewise, there are very few who believe it will continue.

Although I am bullish Apple, I’m not so quick to dismiss Samsung’s ability to maintain its current lead. On the other hand, how Apple chooses to respond has a lot to do with Samsung’s next move. Complicating matters is the fact that other players such as Microsoft(MSFT), BlackBerry(BBRY) and Nokia(NOK) are now looking to recapture market share. How much they are able to steal from Apple and Samsung remains to be seen. But as it stands right now, it’s a two team race. Who will win?

With 30 minutes left before the close, shares of Apple were up $8.24, or 1.91% to $440.74

Disclosure: At the time of publication, Richard held shares of Apple and had no positions in the other stocks mentioned.